The last 300 years have been a strange time, notwithstanding the fact that we call them home. Some of the most arresting graphs in Thomas Piketty's impressive, provocative study of the sources, growth, and distribution of global wealth plot the growth rates of output from antiquity to the near future. The line hugs the base of the graph until 1700, when all at once it shrugs off gravity and soars upwards. After tens of thousands of years of more or less just getting by, with the arrival of the Industrial Revolution men and women began producing and accumulating more — much, much more. Piketty's book traces the contours and implications of this change, and asks searching questions about the future direction of public policy in the light of its likely continuance and acceleration.

The richness, scope and detail of Piketty's analysis means that it is impossible to summarise it without losing much of the vibrancy which makes it such an exceptionally gripping read. But an executive summary of his argument might run like this. The apocalyptic future for capitalism predicted by Marx (whose Das Kapital is obviously echoed in Piketty's title) did not arrive. But this was not because Marx was essentially wrong about the intrinisic instability of capitalism. Rather, it was the unpredictable circumstance of two world wars which postponed the Marxist apocalypse.

The fiscal and social adjustments required to maintain the fabric of society in the aftermath of the global conflicts of the 20th century meant that capitalism went into a muted or benign phase: "the reduction of inequality that took place in most developed countries between 1910 and 1950 was above all a consequence of war and of policies adopted to cope with the shocks of war." Wealth had been liquidated on a vast scale, populations had been ravaged, plant and infrastructure destroyed. Postwar reconstruction demanded exceptional social cohesion. Men and women responded impressively, generating high rates of growth and at the same time launching capitalism into a phase which seemed to suggest that (contra Marx) its forces of convergence were stronger than its forces of divergence.

Piketty argues that this benign or muted phase of capitalism masked its essential nature (which was correctly diagnosed by Marx, notwithstanding the slender evidential base of his theories), and misled economists such as Simon Kuznets into the belief that income inequality would automatically decrease in the later phases of capitalism, no matter what policies were pursued by governments. Moreover, this benign phase is now over. Seventy years of peace have re-created the conditions for the true nature of capitalism to reveal itself once more.

What is the true nature of capitalism? For Piketty it is, as Marx intuited, a system in which capital will tend to accumulate without ultimate restriction, because the rate of return on capital under normal conditions tends to be larger than the rate of growth (r > g). The special conditions for growth created by the two world wars have now evaporated. The forces of convergence are in large measure spent, and the forces of divergence are in the ascendant. Capitalism is reverting to type. This economic process, Piketty says, is morally and politically blind, like all others: "Progress toward economic and technological rationality need not imply progress toward democratic and meritocratic rationality. The primary reason for this is simple: technology, like the market, has neither limits nor morality." The first three parts of Piketty's book are devoted to describing and analysing this transition. They represent a brilliant, mesmerising re-statement of technical matters for a non-specialist readership. Here Piketty's achievement is superb. The fourth part, "Regulating Capital in the Twenty-First Century", prescribes policy responses to these developments, developments that Piketty regards as menacing — of which more in a moment.